Where's the Late-August Market Slowdown?
We received an email from a broker who’s wondering if other people are seeing the market do a late-August, post-subprime-crisis freeze. Cuz she’s not: We have seen tons and tons of people coming out to new listings that we’ve had and lots of bids coming in. It’s actually quite shocking considering it is the end…
We received an email from a broker who’s wondering if other people are seeing the market do a late-August, post-subprime-crisis freeze. Cuz she’s not:
We have seen tons and tons of people coming out to new listings that we’ve had and lots of bids coming in. It’s actually quite shocking considering it
is the end of August after all. But maybe things will slow down when more comes on the market in the fall. Although in past years I recall the fall starting slowly in terms of new listings because lots of people get busy getting their kids settled in school, there’s the Jewish holidays, Columbus Day people go away, and all that. So we’ll see.
Not everything’s humming along though. The broker, who does most of her business in Park Slope and Fort Greene, notes that resales of older places seem to be doing much better than new developments. Meanwhile, a reader who’s been actively in the market for a townhouse wrote us yesterday lamenting the lack of decent product on the market and asking whether we thought the situation would change. Heck if we know. Any of your brokers out there have a sense of the post-Labor Day pipeline?
Yeah, no kidding. I should buy a plot of land and put up a little tar paper shack. Because it would be “rare” it’s value could only increase…lol.
I don’t get this argument that because the supply of brownstones is limited, their value can’t fall. There were just as few brownstones in Brooklyn in 1987 as there are today, yet the value of high-end properties in Brooklyn fell sharply between 1987 and 1993, and there was nowhere near the run-up in prices leading up to that crash that there’s been in the last four years. The willingness to pay historically outlandish prices for brownstones has not been propelled simply by aesthetics or the flood of cash on Wall Street. It’s been propelled by people’s belief — one that’s characteristic of any asset bubble — that the prices of these properties was sure to keep going up, and that an investment in a brownstone was a better investment than in other kinds of assets. And it’s been propelled, as 3:55 says, by historically low interest rates for jumbo mortgages. The underpinnings of both of those drivers look increasingly shaky (if they aren’t gone already). So it only makes sense that, going forward, buyers are going to be more cautious.
This doesn’t mean that people aren’t still going to want to buy brownstones. The demand won’t go away. But they’re not going to want to buy them at prices that are only justified if you assume you’ll be able to sell the property for a lot more in the future. That means prices are likely to go sideways in nominal terms — and go down in real terms — for a while. And just as the cycle fed on itself going up, it’ll feed on itself going down — every six-month period in which prices don’t rise will make buyers less willing to overpay, and sellers more willing to be reasonable. Now, if you’re in your brownstone to live, this is no problem at all. But if you took out an 80% mortgage in the hope that five years from now, you’d have earned 100% on your investment, I think it’s pretty likely you’re going to be out of luck.
wow- that’s a mature response. If you really think the difference in a monthly mortgage is only $800 you really don’t know what you’re talking about. Have you heard about interest-only and negative amortization mortgages? I know for a fact that many people used these to buy at the high end of the market, often with less than 20% down. I actually work in this field. You are the clueless one if you don’t think this will effect the local market. Time will tell…
you’re ignorant, 2:24.
there are so few brownstones on the market and the people interested in them don’t care if their mortgage payment is 10,000 a month or 10,800 a month.
please get a clue.
There is definitely a slow down, regardless of what this broker says, though it may not be as bad in the lower price ranges. I’m really surprised given the content of this log that there is not mre discussion about the mortgage crisis we’re in right now. It will certainly have a huge impact on “brownstone brooklyn,” as the rates for jumbo mortgages are higher than they’ve been in years and who knows if they will go even higher. Remember that it was those low, low rates that led to the boom we’ve been enjoying around here. If buyers were forced to only by what they could truly afford over the past 5 years then a huge segment of buyers would’ve been buying coops/condo rather than expensive townhouses. These very same people that may have paid top dollar for their houses wouldn’t be able to by the same buildings today, even if the prices remained the same. So let’s save the positive propaganda.
12:23 Now that’s funny.
Re: 11:52
The day the war is over, 6 months from then the economy will be in a recession. History is proof to support the claim.
I’m with 1:02 — what possible value is there in reprinting the musings of a person whose entire business depends on making the real-estate market look healthy? Even if she’s not being deliberately deceptive, subconsciously she’s always going to want things to look better than they really are.
Gee, I wonder why a broker would be speculating that things aren’t so bad to a popular real estate blog?